First-home buyers fading
FIRST-HOME buyers are hardly to be seen in the current housing market, according to the housing finance approvals data for September.
The FHBs are the weak spot in the market, analysts say.
The number of approvals to this segment dropped another 3.7 per cent in September to be down 27 per cent for the year to previous September. Just one in every eight (12.5 per cent) owner occupier finance approvals were to FHBs in September – a record low.
This comes as owner- occupier finance approvals posted a solid 4.4 per cent bounce in September, coming off a 4 per cent decline in August.
That was above the consensus forecast of a 3.5 per cent rise. Excluding re-finance activity, approvals were up 5 per cent for the month, and 11 per cent month/year.
Regarding the dearth of FHBs, Westpac economist Matthew Hassan said ‘‘It should be noted that this is not just a story about affordability which on most estimates was near decade best levels as at August. As we have noted in earlier research reports, some of this weakness reflects the wind-downs from earlier pull-forwards in activity relating to changes in state government assistance for FHBs.
‘‘Notably the weakening recent months has centred on Victoria where FHB approvals have collapsed by a third since June to a nine-year low. The Victorian government made significant cuts in FHB assistance from July 1.
‘‘Aside from FHBs though, activity has been rising strongly. Total loans to ‘upgraders’ rose 7.3 per cent in September to be up 26 per cent year on year, the gain strong enough to more than offset the drop in FHB activity even in the case of Victoria.’’
Queensland housing finance commitments increased by 3.4 per cent from 9317 to 9629 (seasonally adjusted).
‘‘This represents a return to positive territory following two consecutive months of falls and is more in line with our confident outlook for the 2013- 14 financial year,’’ Master Builders deputy executive director Paul Bidwell said.
‘‘We anticipate that, as consumer and business confidence improves on the back of a more stable political environment and other favourable economic conditions, these finance commitments will begin to translate into building activity.
‘‘Comparing figures to the same time last year, commitments have risen by 10.9 per cent, which is further good news. ‘‘However, one area that remains a cause for concern is the first home buyer segment of the new home market.
‘‘The proportion of first home buyers in the market fell once again during the month. We believe this fall can be attributed to a lack of confidence in the first home buyer segment and tighter lending requirements.
‘‘For this reason, housing affordability will remain firmly on Master Builders’ agenda into 2014, as the first home buyer segment is an important driver of the housing market.’’
Meanwhile this week the Housing Industry Association, the voice of Australia’s residential building industry, released the Spring 2013 edition of its National Outlook, Australia’s most comprehensive housing report card.
HIA’s latest National Outlook highlights higher levels of new dwelling commencements and steady recovery in renovations investment from a 10-year low.
‘‘The improving level of dwelling commencements achieved in 2012-13 will be consolidated this year before moving up a further leg in 2014-15,’’ commented HIA senior economist, Shane Garrett.
‘‘ Meanwhile, renovations investment is expected to grow in a majority of states and territories after falling to a 10-year low during 2012-13,’’ added Mr Garrett. ‘‘Growth in housing starts during 2013-14 will be concentrated in large states like New South Wales, Queensland and Western Australia,’’ Mr Garrett said.
‘‘Growth in renovations will be much more broad-based, with increases occurring across most states’’.
‘‘Looking further ahead, we see dwelling commencements lifting above the 170,000 per year mark by 2016-17, matching the highs achieved during the post- GFC stimulus,’’ remarked Shane Garrett.
‘‘Over this timeframe, renovations activity is also likely to increase steadily, reaching $30.3 billion by 2017/18.’’
‘‘Record low interest rates and strong population growth is driving increased demand for housing. In this context, it is absolutely crucial that planning reforms and infrastructure delivery facilitate the requisite supply of new housing.
There currently exist many bottlenecks around land supply, infrastructure and the time taken to achieve planning approval for new dwellings.
It is important that both federal and state governments address these obstacles and work with the housing industry in delivering a sufficient supply of affordable housing,’’ concluded Mr Garrett.